Tuesday, February 15, 2011

Most knowledgeable bond investor in the world dumped $120B in U.S. debt last month, coincidentally right before Obama voted 'present' on budget

Bill Gross heads up the world's most successful and powerful bond fund manager, PIMCO. He is so influential with the Obama administration that The New York Times once quipped that he's on Treasury Secretary Tim Geithner's speed dial.

Which makes the timing of this Reuters story so, eh, curious.

PIMCO's Total Return Fund, the biggest bond fund, cut U.S. government-related debt holdings in January to its lowest in at least two years and added to cash and debt from other developed nations... Holdings in the U.S. government-related debt category, which includes U.S. Treasuries, declined to just 12 percent of the portfolio in January, from 22 percent in December...

Bill Gross, the fund's manager who helps oversee more than $1.1 trillion as PIMCO's co-chief investment officer, has often railed against U.S. deficit spending and its inflationary impact. He has advocated buying bonds with "safe," higher yields -- such as corporate bonds -- that can withstand possible erosion of returns by inflation.

Pimco's apparent lack of confidence in U.S. government-related debt in January preceded Monday's budget presentation by President Barack Obama, who laid out plans to cut the deficit by $1.1 trillion over the next 10 years. Under the budget, the deficit would rose tp $1.645 trillion in fiscal 2011, and fall sharply to $1.101 trillion in 2012.

In other words, Gross sold roughly $120 billion in U.S. debt just before President Obama made public one of the most reckless and disturbing budgets in history. And that's according to the liberals.

If I were a more suspicious person, I'd suspect that Gross got the high sign from his buddies in the administration.

Oh, right, but Democrats are for the little people.

Image hat tip: Zero Hedge.

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